Insurer’s Communications with In-House Counsel Not Privileged and Not To Be Sealed

    In a case involving the sealing of records generated by an insurance company, the Hawaii Intermediate Court of Appeals found that communications between the insurer and its in-house counsel were not privileged and should not be sealed. Roy v. Government Employees Ins. Co., 2023 Haw. App. LEXIS 13 (Haw. Ct. App. Jan. 23, 2023).

    GEICO employed Stephen Roy as Managing Attorney for its litigation department. One of Roy’s duties was to defend GEICO’s insureds against lawsuits arising from motor vehicle accidents. Roy sued GEICO, alleging GEICO violated the Hawaii Whistlebloers’ Protection Act and defamed Roy. The complaint also alleged GEICO  interfered with Roy’s ethical obligations in exercising independent judgment for GEICO’s insureds. GEICO never filed a motion to seal or to redact Roy’s complaint or any of the exhibits before the lawsuit was settled. When approving the settlement, the court ordered the entire case file sealed.

    Ed Wagner was a GEICO policy holder. His insured vehicle was damaged and he submitted a claim to GEICO. A dispute arose over GEICO’s repair estimate. Wagner became a vocal critic of GEICO by submitting testimony to the Hawaii state House of Representatives, creating his own YouTube channel, and posting a story about GEICO on an internet website. 

    After dismissal of the Roy lawsuit, Wagner sent a letter to the circuit court Chief Judge with an unfilled motion to unseal the Court’s file in the Roy case. After a hearing, the circuit court entered an order to unseal. The court determined that the prior sealing order failed to satisfy the procedural requirements for public notice and findings to support the sealing. The court ordered the clerk to unseal the file, but delayed implementation of the order to allow GEICO to file a motion to re-seal and file redacted versions of specific documents in the file. GEICO filed its motion, but it was denied based on Wagner’s constitutional right of access to court proceedings and records. 

    GEICO appealed. It contended some of the exhibits in the file were subject to the attorney-client privilege. GEICO argued an email contained confidential communications created by Roy acting in his capacity as in-house counsel for GEICO. The document was made to facilitate his professional legal services between both GEICO and GEICO’s insureds. The second email contained communications to Roy solicited by GEICO’s staff counsel director requesting legal advice and analysis from Roy in his capacity as in-house counsel. GEICO made similar assertions of privilege regarding the paragraphs of the complaint it sought to reseal. 

    The circuit court found that the communications with Roy did not solicit legal advice. Instead, there were discussions between GEICO’s staff counsel and his supervisor questioning GEICO’s policy about what staff counsel may tell staff counsel’s client, GEICO’s insured, about whether GEICO would indemnify its insured for liability in excess of policy limits in cases where GEICO rejectrd a policy limits settlement demand. Similarly, none of the allegations contained in the complaint were protected by attorney-client privilege. GEICO was not asking Roy for legal advice and Roy did not offer legal advice to GEICO as GEICO’s lawyer. 

    Therefore, the circuit court did not err in determining that GEICO failed to meet its burden to prove that the communications were made for the purpose of facilitating the offering of professional legal services by Roy to GEICO. Further, the circuit court did not err in finding the communications were not protected by work product because GEICO failed to establish the materials were created in anticipation of litigation. Finally, the complaint did not reveal trade secrets with regard to GEICO’s managing litigation, specific techniques and alleged practices for creating and enforcing GEICO’s internal policies, or metrics for ensuring control of costs and calculating remuneration of employees. 

    Therefore, the unsealing order was affirmed.

    Special thanks to my Damon Key blogging colleague, Mark Murakami, for forwarding this case.